Your Right to Know

The feud over Auditor Dave Yost’s authority to inspect JobsOhio’s private finances ended yesterday with Yost getting the records he wanted. At the same time, JobsOhio announced it would repay the state the public money it already has received — at least $7.5 million.

Yesterday’s developments set up a much-larger disagreement over the auditor’s ability to review the state’s privatized development agency, with potentially greater consequences. With JobsOhio now funded by proceeds from its lease of the state’s wholesale liquor profits, those on all sides are staking out positions on whether those profits are public dollars — and thus subject to audit.

JobsOhio’s announcement that it would pay back the public money caught most people by surprise. Yost had not asked that the money be repaid; rather, he demanded access to the financial records of how the money was spent. The development agency yesterday said “there will be no more public funds in JobsOhio.”

Brian Rothenberg, head of the liberal group ProgressOhio, said the move “is likely an attempt to argue that JobsOhio no longer (has) public funds to be audited in the future.”

JobsOhio had agreements with the state for grants worth at least $6.5 million, and lawmakers appropriated $1 million in 2011 to cover the organization’s startup costs.

The agency, created by Gov. John Kasich and lawmakers in 2011 to conduct the state’s economic development privately, is now being funded from the proceeds of a $1.5 billion lease of the state’s liquor profits, expected to generate $100 million annually. JobsOhio has said it plans to use the money largely for loans and grants to businesses.

Without any public money, the auditor’s authority to audit JobsOhio is subject to debate. But in a letter to lawmakers yesterday, Yost said JobsOhio’s “money comes from the state’s liquor profits — a revenue stream that one, and only one, company had the right to buy, conveyed by law.”

“But for that public money, there is no JobsOhio,” Yost wrote in the letter.

A lawsuit filed by Democratic lawmakers and ProgressOhio in 2011 argued that JobsOhio’s funding stream from the state’s liquor profits was unconstitutional because that money was public. The substance of the lawsuit has never received a ruling in any court, and a decision over the group’s right to sue JobsOhio has yet to be made by the Ohio Supreme Court.

Kasich and JobsOhio supporters argue that the liquor profits are now private because JobsOhio paid the state to lease them.

However, JobsOhio didn’t complete that lease until Feb. 1, and Yost’s audit will be of records only through June 30 of last year. In complying with Yost’s March 5 subpoena for all of JobsOhio’s financial records yesterday, JobsOhio, Kasich, and the governor’s partners in the legislature were highly critical of Yost, a fellow Republican.

JobsOhio president John Minor warned that Yost could “scare off new job creators and cripple economic development in our state.”

Rob Nichols, a spokesman for Kasich, said Yost’s efforts “will kill JobsOhio” and the legislature “must act quickly to prevent a chilling effect on job creation caused by a mistaken, overly-intrusive interpretation of the auditor’s duties.” Kasich did support JobsOhio’s decision to comply with the subpoena, and JobsOhio said it would ask the legislature to “clarify” the law so that Yost could not pursue future audits of JobsOhio’s private money.

Speaker William G. Batchelder, R-Medina, called Yost “erratic” and said Yost should be taken to court rather than having lawmakers clarify the Ohio Revised Code.

Yost issued a short statement in which he spoke fondly of Kasich and didn’t address any criticisms. But in his letter to lawmakers, Yost urged them “to tread cautiously” when deciding whether to clarify the law.

“I am convinced that JobsOhio will find the process less invasive than feared, and that the predicted problems will not materialize,” Yost wrote, addressing fears that its private donors could be made public. “If I am wrong, you will have ample time to consider clarification before the next audit cycle begins.”

According to a privately conducted audit of JobsOhio by KPMG that was released on March 2, JobsOhio received $6.9 million in secret donations and about $5.3 million in state grants. But KPMG audited JobsOhio’s books through June 30, 2012, meaning there has been no public documentation of JobsOhio’s full financing since it opened on July 5, 2011.

In addition to the legislature’s $1 million appropriation in 2011, the state signed two extensions of a grant contract with JobsOhio’s lone subsidiary worth up to $6.5 million. The day The Dispatch reported those grants, the state asked Yost to audit them. Now JobsOhio will reimburse the state, using the proceeds derived from the liquor-profits lease.

“The idea of paying back public money with public money and saying we’ve made everybody whole is one of the more-ridiculous statements I think I’ve heard this week, and that’s saying a lot around the General Assembly,” said state Rep. John Patrick Carney, D-Columbus.

In an email, JobsOhio spokeswoman Laura Jones said “the company was always intended to be a private organization” and the grant repayment “is in keeping with that.”

“It’s consistent with the vision we always had for JobsOhio — that it be a private company.”

JobsOhio also has a service contract with the state’s Development Services Agency worth about $2 million. Jones said any money JobsOhio received from that contract would be repaid as well.